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Bitcoin drops below $76,000 as Fed holds rates amid mounting Iran tensions
Bitcoin prices declined on Wednesday after the U.S. Federal Reserve kept interest rates unchanged and signaled its readiness to maintain current levels in the face of inflationary pressures stemming from Middle East developments.
Additionally, a new diplomatic stalemate between the United States and Iran weighed on market sentiment. The world’s largest cryptocurrency fell by 1% to 75,632.1 dollars by 17:08 ET (21:08 GMT).
Fed holds rates and Powell to remain on the Board
The Federal Open Market Committee (FOMC) kept the benchmark interest rate unchanged at the 3.50% – 3.75% range, in line with expectations. Notably, the decision saw the highest number of dissents since October 1992; one policymaker favored a 25-basis-point cut, while three members opposed including a bias toward monetary easing in the committee’s statement "at this time."
The Fed's decision comes as a significant surge in oil prices, driven by the Middle East conflict, impacts headline inflation rates in the U.S. Persistent inflationary pressures, coupled with a labor market characterized by a "low-hire, low-fire" environment, further complicate the central bank’s task.
Fed Chair Jerome Powell stated during the post-decision press conference that policymakers are "well-positioned to move in either direction"—whether toward cutting or raising rates—depending on how the impact of high oil prices from the Iran war evolves. Generally, higher-for-longer interest rates negatively affect high-risk assets like cryptocurrencies.
Powell also confirmed that he will continue as a member of the Federal Reserve Board even after his term as Chair concludes. This announcement came on the same day the Senate Banking Committee voted to advance the nomination of his successor, Kevin Warsh, to the full Senate for official confirmation.
Trump plans prolonged Iran blockade and rejects Tehran’s proposal
Regarding the Middle East, the Wall Street Journal reported that President Donald Trump has directed aides to prepare for a prolonged blockade of Iran, preferring sustained economic pressure over direct military escalation or withdrawal. This follows Washington’s rejection earlier this week of a three-stage Iranian proposal aimed at reopening the Strait of Hormuz and delaying nuclear negotiations, which Trump deemed insufficient.
Trump told Axios on Wednesday that he views the blockade as "somewhat more effective than bombing," asserting he will not lift it because he does not want Iran to possess a nuclear weapon. Axios also reported that U.S. Central Command has prepared a plan for a "short and powerful wave" of strikes on Iran to break the negotiating deadlock, citing three informed sources.
Earlier, Trump posted on social media: "Iran can’t get its act together. They don't know how to sign a non-nuclear deal. They better get smart soon!", accompanied by an image of himself holding a weapon with the caption "No more Mr. Nice Guy!"
Oil prices rose on Wednesday as the closure of the Strait of Hormuz persists.
Ilya Kalchev, an analyst at Nexo Dispatch, noted: "Bitcoin's resilience in the face of macroeconomic pressures this week is a more significant indicator than the price level itself. Normally, with oil rising, liquidations increasing, and central banks signaling higher-for-longer rates, risk assets would be expected to tumble, but Bitcoin hasn't." He added that selling pressure might have eased after weaker hands exited the market, or the market could simply be consolidating while waiting for a strong catalyst to determine the next trend.
Crypto Market Today
Most altcoins followed Bitcoin into negative territory on Wednesday.
• Ethereum, the second-largest cryptocurrency, fell 2.2% to 2,241.03 dollars.
• Ripple (XRP) dropped 1.3% to 1.3620 dollars.
Oil prices fall off 4-year peak on US-Iran escalation concerns
Global oil prices retreated on Thursday after hitting a four-year high exceeding 126 dollars per barrel, amid fears that the war between the United States and Iran could escalate further, leading to long-term disruption of Middle East oil supplies and potentially damaging global economic growth.
Earlier in the day, prices surged after Axios reported late Wednesday, citing undisclosed sources, that U.S. President Donald Trump was scheduled to receive a briefing on Thursday regarding plans for a series of military strikes on Iran in an attempt to push the country back to negotiations over its nuclear program.
However, prices later declined without a clear catalyst.
Tamash Varga of oil brokerage PVM noted that the retreat did not appear to be linked to a specific development but rather reflected the high volatility that has characterized the market since the outbreak of the war with Iran on February 28. He added, "This simply reflects the unpredictable nature of trading in Trump’s world."
Global benchmark Brent crude futures fell by 2.05 dollars, or 1.7%, to 115.98 dollars per barrel by 10:16 GMT, after earlier reaching a session high of 126.41 dollars—the highest level since March 9, 2022. The prompt June delivery contract expires on Thursday.
Meanwhile, the more actively traded July contract stood at 109.93 dollars per barrel, down 51 cents or 0.5%.
Traders noted the execution of two large sell orders for June Brent futures shortly before 09:30 GMT, which was confirmed by LSEG data.
BOE holds rates for third meeting in a row
The Bank of England’s interest rate decision was released today, Thursday, at the conclusion of its April 30 meeting. In line with market expectations, the central bank kept interest rates unchanged at the 3.75% range, the lowest level since December 2022, marking the third consecutive meeting without a change.
• This statement is "positive" for the British pound.
Dollar declines against yen on Japanese signals of intervention
The U.S. dollar retreated against the Japanese yen on Thursday after Japanese officials sent strong signals regarding potential intervention in the currency market, at a time when markets remain tense due to escalating Middle East friction.
Japanese Finance Minister Satsuki Katayama stated on Thursday that the timing for taking "decisive action" in the market is approaching.
The yen fell 0.55% to 159.45 against the dollar, after earlier hitting 160.72, its highest level since July 2024. The Japanese currency has declined by more than 2% since the outbreak of war on February 28.
Following its monetary policy meeting on Tuesday, the Bank of Japan indicated that it might raise interest rates in the coming months.
Investors are weighing the impact of rising oil prices—which tend to pressure the yen—against fears that Japanese authorities might intervene to support the currency near the 160 level.
Oil prices pressure Euro and Yen
Brent crude futures rose 2.5% following a report that the United States is considering military options to break the deadlock with Iran.
Demand for safe-haven assets had supported the dollar in March following the start of the war, reflecting the U.S. economy's lower exposure to high oil prices compared to the Eurozone and Japan.
Analysts believe a potential nuclear deal represents the primary hurdle to a Middle East peace agreement, as any deal that leaves Iran's nuclear program largely unchanged could be politically costly for the U.S. President domestically.
The dollar index fell 0.15% to 98.79 after recording 99.092, its highest level since April 13.
The Euro stabilized at 1.1680 dollars, while the British pound traded at 1.34877 dollars, showing little change.
The Bank of England and the European Central Bank are scheduled to hold their meetings later today, with markets awaiting their guidance amid growing expectations that they may soon be forced to raise interest rates.
Hawkish tilt from the Federal Reserve
U.S. Federal Reserve Chair Jerome Powell concluded his eight-year term by keeping interest rates unchanged amid mounting inflation concerns. The Fed's decision to hold rates was passed by an 8-4 vote, the largest split since 1992, with three dissents from officials who no longer see the need to signal a dovish bias toward monetary easing.
This hawkish tilt pushed bond yields higher, reaching their highest levels since March 27.
On Wednesday, traders scrapped bets on interest rate cuts this year, with markets now pricing in a 55% chance of a rate hike by April 2027, up from about 20% prior to the decision.
U.S. President Donald Trump expects Kevin Warsh, his nominee to succeed Powell on May 15, to cut interest rates. However, Warsh stated that he has made no such pledge to Trump.
Michael Pfister, currency strategist at Commerzbank, said:
"Current times might be suitable for cutting interest rates, and Warsh would have to convince his colleagues on the FOMC to take such action."
He added: "The dissents we saw yesterday show that this will not be easy, if he even wants to do it," referring to the removal of the easing bias.